Washington, DC — The House Financial Services Committee hearing today on official corruption, its impact on developing countries, and the role of Western financial institutions will set the stage for new legislation on improving economic development efforts around the world, according to opening statements made by Committee Chairman Barney Frank.
In his opening remarks Ranking Member Bachus voiced an intent to “put Africa front and center” and examine the “interconnectivity of emerging economies and Western economies,” in recognition of the fact that “corruption effects us all.”
In this capacity, the Committee heard from a panel of anti-corruption experts including: Global Financial Integrity (GFI) director Raymond Baker, Global Witness investigator Anthea Lawson, international tax-law and asset-recovery specialist Jack Blum, Esq., former Chairman of the Economic and Financial Crimes Commission in Nigeria Mr. Nuhu Ribadu, and Former Romanian Minister of Justice, Monica Macovei.
The panelists’ statements covered the mechanisms and means of official corruption, laxities and loopholes in banking practices that enabled banks to handle the proceeds of criminal activity despite anti-money-laundering, anti-corruption regulation, and how official corruption undermines economic development efforts in developing countries such as Nigeria.
The hearing also featured three panel-members with close-ties to Nigeria, which saw two recent developments last week in a decade-long corruption case involving Halliburton subsidiary Kellogg, Brown, and Root, Nigerian Government officials, and kickbacks for lucrative construction contracts. Last September KBR CEO Jack Stanley was found guilty of violating the Foreign Corrupt Practices Act and sentenced to seven years-incarceration while KBR was fined $570 million—the largest fine ever handed down to a U.S. company—for paying $180 million in bribes to secure approximately $6 billion in contracts for a liquefied gas plant over the course of a decade.
Last week United States prosecutors launched extradition proceedings against British lawyer Jeffrey Tessler, a key figure in an international bribery scandal and Nigeria initiated court proceedings for 10 Nigerian officials suspected of accepting bribes.
Mr. Blum is curerntly representing the Government of Nigeria in the bribery case. Mr. Baker lived and conducted business there for 10 years. Mr. Ribadu actively fought corrutption in Nigeria until December 2008.
As Mr. Blum noted in his testimony though, mutual assistance requests from the Nigerian government to the U.S. for information about Nigerian officials who accepted KBR bribes (uncovered in the process of the U.S. investigation into the KBR case) may have to wait until the U.S. investigation concludes.
Nigeria is also attempting to retrieve the $150 million in bribe money thought to be stashed away in multiple Swiss banks. The Swiss Government has said it is prepared to assist Nigeria in recovering the money.
Today’s hearing represented a good step-forward in addressing the role Western financial institutions play in facilitating government corruption. The panel made recommendations for improving banks’ due diligence and overall transparency to curtail illicit financial outflow, including:
- Required disclosure and reporting of beneficial ownership,
- Automatic exchange of information as delineated by the U.S.-Canada tax treaty and under the European Union Savings Tax Directive,
- Country by country reporting of sales and profits and taxes paid by multinational corporations,
- Strengthened Know-Your-Customer Provisions, and
- Harmonization of predicate offenses under the anti-money-laundering laws of all countries cooperating with the Financial Action Task Force.
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